Landlord Insurance Ultimate Guide - ALLCHOICE Insurance - North Carolina

The Ultimate Landlord Insurance Guide

Everything You Need To Know To Better Understand Landlord Insurance

Whether you need answers to these questions about rental property insurance or just want a landlord insurance quote, you’ve come to the right place

Should I Get Landlord Insurance?

You should get a Rental Property Insurance Policy if you own a rental home.

Is Rental Property Insurance Required By Law?

Rental Property Insurance is NOT required by law.

If there is a Mortgage on your rental property, then your mortgage company may require you to carry Landlord Insurance that covers the building.

You may not be REQUIRED to have Landlord Insurance, but you should have a well designed policy to cover your Rental Property.

What Does Landlord Insurance Cover?

Landlord Insurance has different coverage options for the rental property owner to consider

Building Coverage

The primary coverage fo any Landlord Insurance is the Building Coverage. You are financially invested in your property and need to protect yourself from that property being damaged. There are several issues that need to be considered when insuring your property:

  • Insurance To Value – As with every other type of Property Coverage (Commercial or Personal), Insurance Carriers require that you insure your property to 100% of the properties Replacement Cost.
  • Deductible – The deductible is the amount that you will pay first in the event of a loss
  • Construction – The better the construction (example: steel construction vs. wood construction) the lower the premium will be.
  • Age – The newer the property, the lower the premium will be.

Liability Insurance Coverage

People and/or businesses that own property for lease or rent have an enormous exposure to lawsuits. Someone could trip and fall on your property and sue you for their injuries! There is a big difference between Landlord Insurance Policies and Personal Rental Property Insurance Policies with regard to covering liability exposures.

The Landlord Insurance Policy has both Property and Liability Coverages included (the policy “packages” both Property and Liability Coverage into one policy). Personal Rental Property Insurance, on the other hand may, or may not, offer liability coverages.

If your Personal Rental Property Insurance Carrier does not offer liability coverage on the policy, how do you protect yourself from liability?

There are two ways to accomplish this.

  1. “Endorse” your Homeowners Insurance Policy to extend the liability protections to your Rental Property.
  2. Purchase a Personal Liability Policy. (This method of obtaining Liability Protection is rarely used or offered today)

Loss Of Income

As a Landlord, your income comes from the rents you receive from your tenants.

If your property is damaged, or destroyed, you may lose rental income until the property is able to be rented again.  Loss Of Income coverage will pay the rent until for up to 12 months while the property is being repaired.

How Much Does Landlord Insurance Cost?

How Are Rental Property Insurance Rating Factors

Rates for Rental Property Insurance are determined based off of a number of factors:

  • Landlord Claims History
  • Policy Type
    • Commercial Policy Form vs. Personal Policy Form
  • Location Of Home
  • Coverage Amount
  • Deductible
  • Liability Amount
  • Tenant Type

Is Landlord Insurance More Expensive Than Homeowners Insurance?

In general, Landlord Insurance is more expensive than Homeowners Insurance! The fact is that if you OWN a home, you will care more for that property than someone that doesn’t.

There are more claims, percentage wise, on Rental Properties than on Owner Occupied Properties.  Thus, the need for a higher premium.